Engineering giant Rolls-Royce has announced that the majority of its nuclear operation in Derby is to be integrated into its defence business as part of major restructuring plans.
The company has said that its nuclear site, in Raynesway, which makes power plants for the Royal Navy, will become part of Rolls-Royce Defence.
The move is part of the firm’s plan to reduce its number of operating businesses down to three core units – Civil Aerospace, Defence and Power Systems.
Rolls-Royce currently has five operating businesses – Civil Aerospace, Defence Aerospace, Nuclear, Marine and Power Systems.
As well as having its Nuclear business in Derby, the city is also home to its Civil Aerospace division at Sinfin.
The Raynesway site employs more than 2,600 people who make power plants for the Royal Navy’s fleet of nuclear-powered submarines.
It is understood that a small number of staff at the site work for the firm’s civil nuclear business, which is to be integrated into the Power Systems part of Rolls-Royce.
The changes are expected to come into force during the first quarter of this year.
Over 2,600 people work at Rolls-Royce’s Raynesway site
Rolls-Royce said that the potential impact caused by the changes on its workforce “remains to be quantified”.
The firm said that it expected the restructuring to deliver “an additional reduction in costs”. However, at this stage it has not specified how much money it will save the company.
Rolls-Royce said that further details would be given when the firm announces its annual financial results on March 7.
In a statement, Rolls-Royce said: “These actions are designed to align our business more closely with our strategic vision to pioneer cutting-edge technologies that deliver vital power.
Rolls-Royce said the changes were part of its ‘strategic vision’ for the company
“We intend to integrate our existing nuclear operations into our Defence and Power Systems businesses.
“Our nuclear submarines operation, which is the sole provider and technical authority for the Royal Navy’s nuclear submarine fleet, will form part of Rolls-Royce Defence, while our civil nuclear operations will be placed within Rolls-Royce Power Systems, which already provides services to the nuclear industry such as emergency diesel generators.”
However, the company has said that workers in its Civil Aerospace division – by far the larger of its two businesses in Derby – will not be affected by the changes.
The firm’s Sinfin site produces the Trent family of aero engines and employs around 12,000 people. The firm is currently investing heavily to modernise the site, which includes the building of a £90 million new test bed.
An artist’s impression of the new test bed that will be built in Derby
Rolls-Royce said: “We do not anticipate any reduction in the skilled operational and engineering roles that we require to support our current ramp-up in civil aerospace engine production.
“We will honour commitments made to workers’ representatives in the UK and elsewhere, including those which enabled last year’s £150 million investment in new and existing Civil Aerospace facilities.”
As well as investing in Civil Aerospace, at the same time, there is evidence of Rolls-Royce investing in the nuclear site at Raynesway.
The firm has recently been given permission to expand its Primary Component Operations building and construct a four-storey office building, which would contain 400 workstations and add 200 parking spaces.
Rolls-Royce has been given the go-ahead to expand its Primary Components Operations building at Raynesway
Chief executive Warren East said: “Building on our actions over the past two years, this further simplification of our business means Rolls-Royce will be tightly focused into three operating businesses, enabling us to act with much greater pace in meeting the vital power needs of our customers.
“It will create a defence operation with greater scale in the market, enabling us to offer our customers a more integrated range of products and services.
“It will also strengthen our ability to innovate in core technologies and enable us to take advantage of future opportunities in areas such as electrification and digitalisation.
“Alongside the simplification into three operating businesses, we must continue to address the cost and complexity of the structures that support and serve these businesses, including our corporate head office, with greater decisiveness.
Rolls-Royce chief executive Warren East
“Taking this action now will help secure the long-term benefit for our business and stakeholders of the growing cash flows that will be generated over the coming years.”
Rolls-Royce said that the integration of its business into three core units would result in the “fundamental restructuring” of its support and management functions.
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Rolls-Royce’s chief financial officer Stephen Daintith said: “We must address the imbalance and duplication between our corporate functions and our three business units, as well as the cost of our corporate head office.
“Costs and complexity within our business remain too high, despite the delivery of the transformation activities announced in November 2015 which will achieve the committed fixed cost reduction rate of over £200 million from the end of 2017.
“We are taking decisive action now in order to secure and enhance the long-term benefit of the cash flows that will be generated over the coming years.”
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Source: Derby Telegraph